VEDOMOSTI. The Russian finance ministry is prepared to establish the Russian Financial Agency (RFA) by the end of 2010, Vedomosti business daily wrote on Monday quoting a relevant draft law. The document will be submitted to the government until the end of March, the finance ministry’ deputy department head Petr Kazakevich said.
RFA will be established as a state-owned joint stock company, with shareholder rights to be exercised by the finance ministry. RFA is to be founded to improve efficiency of managing free resources and assets of the state, and also public debt. The finance ministry finds it difficult to manage public debt through the Central Bank of the Russian Federation, Kazakevich explained adding “for example, the law does not permit CBR to deal with stocks and corporate bonds, in which some money from the National Welfare Fund (NWF) could be held in principle”. The finance ministry lacks sufficient expertise and resources for operations on the market and, what’s more, the conflict of interest is in place, as the ministry currently works out the policy for managing government assets and liabilities, and regulates the same policy, Kazakevich pointed out.
The government will decide which assets will be assigned to RFA. These assets could include sovereign funds, free budget resources and pension accruals, Kazakevich explained. But the possibility of managing pension accruals was not elaborated in detail, he noted. Currently, pension accruals of those who did not decide whom to trust their pension money are managed by VEB. Pension accruals could be assigned for management to RFA, but this is the issue of not today or tomorrow, director of the Ministry for Economic Development’s department Ivan Oskolkov said. The assignment of free budget funds could not be needed at all, he went on to say, as their placement terms are very short. The Ministry for Economic Development agreed upon the draft law.
RFA is supposed to manage government assets and liabilities on the basis of agency and trust administration agreements to be signed with the finance ministry. State-run corporations received assets into ownership, said Rustam Kurmaev, Goltsblat BLP. These agreements will contain regulations for investments in assets and purchase of government obligations, but the draft law prohibits the finance ministry to interfere with RFA’s operating activity.
RFA will be able to operate on the market independently or with participation of the Bank of Russia and management companies. At the initial stage work will be performed through management companies, Kazakevich said. Wages of RFA employees will consist of salaries and also bonuses, which will depend on how efficiently the agency operates. Relevant criteria are being elaborated, he said adding “most likely a conditional portfolio will be formed and its returns will be compared with what the agency gets”. The agency’s general director, members of the collegial executive body and their relatives will be required to provide information about their salaries. The agency’s board of directors and the management board will probably include not only employees from the finance ministry, the Ministry for Economic Development, the Federal Service for Financial Markets (FSFM) and the Bank of Russia, but also independent directors, Kazakevich said.
RFA could be registered as a legal entity by the end of 2010, Kazakevich hopes. The state should replenish the agency’s charter capital to enable the latter to commence operations. Opposed to state-controlled corporations a contribution to RFA will be modest, just to create conditions for operations, he said.
